Music boss can't wait to sue British file sharers

The thoughts of Chairman John

The boss of Universal Music Group UK John Kennedy can't wait to start suing British music sharers. John who? Although he's well known in the British music business, Kennedy will have a bigger pulpit fairly soon. The combative former shipping lawyer will succeed Jay Berman as head of the lobby group the IPFI - the international version of the Recording Industry Ass. of America (RIAA) - and he defended both the the lawsuits and file poisoning at the In The City music conference in Manchester this week.

In the past the record industry had lobbied governments, only be told that it needed to deal with the problem through civil legislation. The lawsuits gave it new credibility, he said. Kennedy spoke repeatedly about "stealing", but didn't use the occasion to offer any new ideas on monetizing file sharing. He also vowed to fight hard to extend European copyright past the 50 year limit, "to bring it into line with the rest of the world," he said.

The UMG boss had little sympathy for the twelve-year-old girl in a New York housing project who had harbored an MP3 of the theme tune to her favorite show on her computer, and had been sued by the RIAA. Her family paid out thousands of dollars in a settlement. She was a "serious file sharer", insisted Kennedy.

But he had even less sympathy for songwriters, who receive only a small fraction of royalties that recordings owners receive. that was fair, he insisted, as hits were down to investment in marketing, he said. At Polygram (which became Universal), Kennedy had stopped the practice of chart-fixing, he said, "because we were so bad at it. Songs that were supposed to chart at No.6 were coming in at No.34".

He'd be more sympathetic to songwriters, he said, the day that record companies had "50 per cent margins". In fact, he claimed that record companies spend more on R&D than technology companies, because of the marketing spend required to create a hit [*]. The implication was clear: the success of an artist was down to the Shock and Awe bombing of the record company's marketing team, which is very expensive.

(Alert readers will be wondering why, if the songwriter's contribution is so ephemeral, UMG doesn't score a number one hit with every record it releases. John could then write all the hits himself, on a toy piano).

Smacking students

Kennedy said that the practice of sueing file sharers had government support and had begun to make a difference, especially in US colleges. Students knew that if they were caught drink-driving they'd face jail, or downloading an exam cheat from the Internet, they'd face expulsion; but students could download music with impunity. The music industry is keen to impose a per-college tax on students for sharing files, although the students lose the music when they graduate.

Kennedy was bullish about the new music download stores, which is not surprising since it's early days, the press has been favorable, and very few have gone bust yet. In the past labels had "got greedy and decided to be retailers as well as wholesalers," he said, and had forgotten that the record company isn't a brand that means anything to the mass market.

Asked by The Observer's Faisal Ahmed why it took a technology company, Apple Computer, to create the online goldrush, Kennedy said it was down to the iPod.

"A hardware company came up with a sexy piece of hardware. A record company couldn't do that," he said.

Nevertheless, he enthused about the quality and value of the downloadable song.

"For 79p you've got a work of art that's like a Picasso, only one that's as close to the original as you can get," he said. [**]

But record companies were still needed, he said, because "no unsigned band has been broken by the internet," he said. "Bands are screaming in space on the internet."

Every pigopolist has a hard luck story, it seems, and Kennedy's was that he'd turned down the chance to manage George Michael in the Wham! days. That decision cost him £20m, he said, and he now goes home on the bus. Later, Kennedy had extracted The Stone Roses from their first indie contract but then went into bat against George Michael when the pop star wanted to extract himself from his own contract with EMI.

After the session, a member of the audience who buys his own music and doesn't work for a record company asked your reporter what the average person in the street would think, if he'd heard Kennedy's performance. Although the UMG chief could undoubtedly give as good as he got, I suggested that the instinctive reaction wouldn't be verbal. ®

[*] On the balance sheets that the rest of the world must use, marketing expenditure is filed under "cost of sale", not R&D.